The US economy shrank at an annualized rate of 2.9 percent in Q1 • Hacker News Board

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#91

Post by sillysaurus3 » Wed, Jun 25, 2014, 11:00 PM UTC

nostrademons wrote: post #70

pessimizer wrote: post #61

Earlier quoted context omitted.

That one is the misleading one. We're interested in the magnitude of the change vs. the recovery, not the numbers 0 to 100. A graph of GDP plotted as a percentage of current GDP at that scale could make the recession seem like a tiny little 2% blip.

The recession is a tiny little 2% blip, if you're one of the ~85% of people who were not laid off and didn't have any trouble finding a job. And it's a very large 2% blip if you're one of the people who are. My point is that perspective matters - a lot. By the numbers, this recession is worse than any since the Great Depression. By the numbers, this recession is only a small percentage of the total U.S. economy. Whic…

Very good points! From my perspective, the recession was devastating. Not for me, but for a friend's family. One of them owned a side business involving construction. Not enough to pay all the bills, but in '07 suddenly it was. So he quit his regular full-time job, even though he had a full family to support. It wasn't a stupid decision though, because he had so many contracts (guaranteed cash flows) that he could support his whole family twice over. I remember that business was so good that he made a big show of unveiling a wonderful grand piano for the whole family. He had the contracts to support such a lifestyle. Then '08 happened, and the contracts were all canceled. (Illegally, but that's beside the point; he couldn't afford to pay any bills, let alone a lawyer to go after anybody.) I later found out he had contemplated an elaborate suicide to collect on death insurance to provide for his own family.

Not trying to contradict anything you've said; merely adding an alternate perspective.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#92

Post by joesmo » Wed, Jun 25, 2014, 11:19 PM UTC

"Recession-like. It is astounding that we are using any variation of that word five years into the recovery."

No, it's not. There is little to no recovery. The only surprising thing about analysis like this is how far the author goes to avoid explicitly stating this when it's so implicit in the article.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#93

Post by pessimizer » Wed, Jun 25, 2014, 11:28 PM UTC

nostrademons wrote: post #89

pessimizer wrote: post #76

Earlier quoted context omitted.

You honestly think that the scale was hand picked, rather than being determined by the software being used to generate every graph on the site? The scale looks to be determined by the floor of the lowest value, and the ceiling of the highest.

I didn't say hand-picked. By cherry-picked I mean that the software picked out two arbitrary values that are just outside of the range of the data. The values are still arbitrary: they show direction well but magnitude poorly.

That's not what cherry-picked means. Cherry-picked means more what you are referring to when you say "hand-picked" here. It means to carefully choose the best.

http://dictionary.reference.com/browse/cherry-picked

That's also not what arbitrary means. If you select numbers that are just outside the range of a particular set of data, that's anything but arbitrary. Arbitrary means to choose based on someones discretion or judgment rather than to determine by rule. Comes from the same root as arbitration.

http://dictionary.reference.com/browse/arbitrary

I'm not saying all of that to criticize your use of words, I'm saying it because I honestly don't know what you're trying to say. I think you're probably changing the goalposts.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#94

Post by pessimizer » Wed, Jun 25, 2014, 11:40 PM UTC

malandrew wrote: post #79

pessimizer wrote: post #63

Earlier quoted context omitted.

I'm having trouble understanding what you're saying here. What's left after saving and spending?

For example, let's say I made 50k in 2008 after taxes and saved 10% (5k), and in 2013 I made 55k, but saved only 5% (2.5k). My PSR went down by 50%. The first conclusion one might make is that I decided to spend more and save less. i.e. I've become more consumptive. However an alternate explanation is that inflation growth has outpaced my income growth, and that I am in fact consuming the same amount (in terms of mea…

Inflation inflates income dollars and cost dollars, because they're both made of dollars.

Are you talking about some kind of consumption that isn't measured in dollars? I'm not talking about the amount of things that people are consuming, I'm talking about the percentage of their income that they are spending on consumption. Whether that buys a can of peas one year and a yacht the next makes very little difference. If during that first year, everybody bought a can of peas, and in the second, everybody bought a yacht, consumption hasn't increased.

In other words, if your savings rate had to lower because you make less money and things are more expensive, your consumption has gone up.

edit: I'm not trying to make a statement about Americans being wild spenders; I'm trying to make a statement about the possibility of a consumption driven recovery. Americans are very close to the limit of the ability that they have to spend more.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#95

Post by malandrew » Wed, Jun 25, 2014, 11:49 PM UTC

pessimizer wrote: post #94

malandrew wrote: post #79

Earlier quoted context omitted.

For example, let's say I made 50k in 2008 after taxes and saved 10% (5k), and in 2013 I made 55k, but saved only 5% (2.5k). My PSR went down by 50%. The first conclusion one might make is that I decided to spend more and save less. i.e. I've become more consumptive. However an alternate explanation is that inflation growth has outpaced my income growth, and that I am in fact consuming the same amount (in terms of mea…

Inflation inflates income dollars and cost dollars, because they're both made of dollars. Are you talking about some kind of consumption that isn't measured in dollars? I'm not talking about the amount of things that people are consuming, I'm talking about the percentage of their income that they are spending on consumption. Whether that buys a can of peas one year and a yacht the next makes very little difference. I…

Nominal dollar values is but one way to measure consumption.

The original comment I was elaborating on was talking about other factors that can impact PSR without a change in consumption patterns as measured by what goods and services are received not the nominal value spent on them. One important and very real factor is that nominal income growth for most workers has not grown as fast as inflation. On a macro level you're right, but at the individual level it's that mismatch that matters.

I wasn't talking about measuring consumption in dollars but in value received. If I buy a can of peas this year for $1 and a can of peas next year for $1.10 (assuming no factors specific to the peas or can market), then I have consumed the same amount in terms of the benefit I get. You're also right that I've consumed more in terms of nominal dollar values, but nominal dollar values wasn't the measurement stick I was using when I said they consume the same amount.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#96

Post by refurb » Thu, Jun 26, 2014, 1:18 AM UTC

clavalle wrote: post #38

refurb wrote: post #19

Earlier quoted context omitted.

Unfortunately the ACA doesn't do much to address increasing healthcare costs. There are a few initiatives (comparative medicine funding is one that comes to mind) that are good starts, but the ACA is likely to lead to overall higher GDP expenditures on healthcare in the US, not lower, as more and more uninsured have access to care.

Your analysis assumes healthcare is like any other commodity. While the primary aim of the ACA is not overall cost reduction (but, rather, make it affordable for the uninsured to get insurance), there are several reasons it could go down that path. The marketplaces and minimum standards for insurance plans make it easier to comparison shop. The fact that people will have insurance will lead to earlier and cheaper tre…

Check out the Oregon Medicaid study and you'll find evidence that counters your claims, namely that access to healthcare improves health outcomes (i.e. early detection and treatment did not lead to measurably better outcomes). [1]

It's a pretty impressive study. They took a number of uninsured in Oregon and held a lottery. Half of the people got free access to Medicaid and the other half remained uninsured.

The study found that costs go up (because people now have health insurance), but people weren't better off in terms of health (except for those with depression).

[1]http://en.m.wikipedia.org/wiki/Oregon_Medicaid_health_experi...

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#97

Post by Zigurd » Thu, Jun 26, 2014, 1:49 AM UTC

malandrew wrote: post #78

dclowd9901 wrote: post #53

Earlier quoted context omitted.

Part of this slowdown in consumer spending also has to do with the tightening of credit as well, making it more difficult for people without means to spend. In my opinion this is a great thing. When people are backed against a wall because they have no other way to pay for their livelihood than their salary, they're not going to be ok with stagnant wages and companies low balling them. Bring on the pain, I say. Real…

Interesting observation. It's really hard to shake off the shackles of presentism and imagine what the US would look like on an alternative timeline where the US government had not aggressively promoted home ownership and easy credit. The economy and legislation are now so thoroughly distorted in favor of home ownership that it's difficult to imagine how things could have been different. Specifically, I'm wondering i…

A cost revolution in creating housing is much less likely than MOOCs killing the 3rd tier colleges.

I'd like to be in an alternate universe without the Iraq and Afghanistan wars. Afghanistan is famously The Graveyard of Empires, and I wonder if we are not just staggering around with a mortal wound, with another crash coming to bring us down comprehensively. Nationalizing the ibanks instead of TARP would be a nice alternate universe, too.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#98

Post by DangerousPie » Thu, Jun 26, 2014, 10:16 AM UTC

pessimizer wrote: post #61

DangerousPie wrote: post #45

Earlier quoted context omitted.

Very misleading Y axis. Here is the same plot with a proper axis: http://i.imgur.com/k4ClDSF.png

That one is the misleading one. We're interested in the magnitude of the change vs. the recovery, not the numbers 0 to 100. A graph of GDP plotted as a percentage of current GDP at that scale could make the recession seem like a tiny little 2% blip.

I was mostly thinking about the "it illustrates how impactful the '08 crash was" in the original comment. Of course it looks like a huge change if you restrict the Y-axis, but if you plot it on the full axis you realize that it was actually still relatively small. It did of course affect millions of Americans and might have been the biggest decrease in a long time, but it was nowhere near the 80% drop that it looked like in the original plot.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#99

Post by mikeash » Thu, Jun 26, 2014, 2:28 PM UTC

gone35 wrote: post #66

mikeash wrote: post #17

Can anybody who understands this stuff better than I do comment on the winter weather factor? To me, the "winter sucked" excuse sounds like complete BS, a transparent lie along the lines of, "Well, I just didn't want to order the tide to stop right now." This is a massive change (down a total of 7% or so from two quarters prior) and surely the weather, while unusual, wasn't that strong. But maybe it really is a big f…

It's not intuitive, but since building sites must halt work during strong winter days, a large increase in the number of 'snow days' has an outsize effect on the total output of the construction sector --one of the largest sectors of the US economy-- during Q1. This past winter was peculiar in that regard because not only there were more snowstorms overall than the previous year, but also there were major snowstorms…

Interesting point about catching up on work in the subsequent quarter. This sort of thing is why I thought the impact of weather was overstated, but I thought that the catchup would have happened during the same quarter. If it takes just a little bit longer then that would skew things a lot.

Also, I love how I can ask this question and get a ton of quality answers in quick succession.

Re: The US economy shrank at an annualized rate of 2.9 percent in Q1

#100

Post by mikeash » Thu, Jun 26, 2014, 2:36 PM UTC

Zigurd wrote: post #97

malandrew wrote: post #78

Earlier quoted context omitted.

Interesting observation. It's really hard to shake off the shackles of presentism and imagine what the US would look like on an alternative timeline where the US government had not aggressively promoted home ownership and easy credit. The economy and legislation are now so thoroughly distorted in favor of home ownership that it's difficult to imagine how things could have been different. Specifically, I'm wondering i…

A cost revolution in creating housing is much less likely than MOOCs killing the 3rd tier colleges. I'd like to be in an alternate universe without the Iraq and Afghanistan wars. Afghanistan is famously The Graveyard of Empires, and I wonder if we are not just staggering around with a mortal wound, with another crash coming to bring us down comprehensively. Nationalizing the ibanks instead of TARP would be a nice alt…

I think we are the alternate universe. Bush's win over Gore in 2000 was so ridiculous that a half-assed intervention by time-traveling experimental historians almost seems like a reasonable explanation.

It is interesting, and sad, to think of how much may have ended up hanging on a couple of hundred Florida voters. Of course, it may be wrong to think that a Gore presidency would have been all that different.